Published
Feb 14, 2022
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Studio Retail prepares to call in administrators as it fails to get £25m loan

Published
Feb 14, 2022

In shock news on Monday, it emerged that Studio Retail is preparing to call in administrators. This was only two weeks after it said it had been hit by logistics issues in the Christmas period and issued a second profit warning in just two months.


Studio Retail



But it also came after a number of upbeat trading reports last year that had suggested the business was back on the right path. 

So what’s the specific problem now? The company said it “has a surplus stockholding which requires additional working capital funding whilst this good quality stock is sold through to customers”.

It had requested a £25 million short-term loan from its banks for this purpose. But “following detailed discussions with our UK lenders, the company has not been able to reach agreement with them to provide the additional funding Studio requires”.

The board therefore now “intends to file a notice of intention to appoint administrators to SRG and Studio Retail Limited, its wholly owned subsidiary, as soon as reasonably practicable”. It added that it’s taking this action to protect the interests of its creditors”.

The firm’s biggest shareholder is Mike Ashley’s Frasers Group, which slightly increased its holding only a fortnight ago.

The decline at Studio Retail is a symptom of the volatile conditions that have beset the retail industry around the world since the onset of the pandemic. Its two recent profit warnings came in fairly quick succession with the firm’s trading apparently going into reverse after those positive signs last year. 

It appears to have been hurt by the biggest issue facing retail at present — supply chain problems. That includes delays getting stock to the right place at the right time and surging costs as retailers are forced to pay much higher rates to ship their goods. 

In an ironic twist, while it had issues getting hold of stock when it needed it for the Christmas quarter, it’s now left with a big surplus today.

Studio sells to around 2.5 million customers and saw sales of almost £580 million last year.

It’s unclear what Mike Ashley’s view of the situation will be and whether he might be interested in a takeover, something he attempted in 2019. 

Studio Retail isn’t the first company in which his business has invested to go into administration with Debenhams having also been a high-profile failure.

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